Share This Story!

One thing Obama's gun plan can't take away

President Obama's proposals to tighten gun rules announced Tuesday can't take at least one thing away: The rally in gun stocks. Shares of the key three gun-maker stocks, Sturm, Ruger (RGR), Smith & Wesson

President Obama's proposals to tighten gun rules announced Tuesday can't take at least one thing away: the rally in gun stocks.

Shares of the key three gun-maker stocks, Sturm, Ruger (RGR), Smith & Wesson (SWHC) and Vista Outdoor (VSTO), jumped an average of 7.0% Tuesday as investors anticipated a boost in firearm sales by consumers looking to lock in their purchases before tougher rules are passed.

Strong performance by gun stocks is in stark contrast to the rest of the market. The broad market had a ho-hum 2015 and is off to a shaky 2016 so far. But gun stocks have been a beacon of strength. So far this year, the three gun makers' stocks are up 10.8% on average as the Standard & Poor's 500 has sunk 1.3%. Those big gains come off a remarkable year for gun stocks in 2015. The three gun stocks jumped an average of 78.1% in 2015 - a huge gain when the S&P 500 dropped 0.7%.

Several large mutual fund companies including Fidelity and Vanguard have been huge winners from the gun-stock rally.

Consumers have been rushing to load up on guns and ammo for fear the government would make it tougher to get new weapons. Recent violence around the world has stoked interest by regulators to tighten rules, especially with background checks.

Smith & Wesson has been the best-performing gun stock, jumping 132.1% in 2015 and 17.7% this year so far.

Late Monday, Smith & Wesson indicated its financial performance would be better than expected. "The sell-through rate of its products at distribution has been stronger than originally anticipated," the company said in a release.

Smith & Wesson's revenue is expected to surge 18% to $650 million in the current fiscal year ended in April, says S&P Capital IQ. Looks like there's nothing more bullish for firearms sales -- at least in the short term -- than the threat of new rules making them harder to buy.